WSJ's Moore echoed George Will falsehood that Social Security taxes are levied on household income

June 11, 2008 2:53 PM EDT ›››
MATT GERTZ

In a June 11 online column criticizing Sen. Barack Obama on tax policy, Wall Street Journal editorial board member and senior economics writer Stephen Moore falsely suggested that Social Security taxes are levied based on household income. Moore asserted that Sen. Barack Obama "has vowed ... to end the cap on Social Security taxes, which amounts to a tax hike on anyone who makes more than $100,000 in income." He later asserted: "All of this has caused some heartburn among certain Democrats in high cost-of-living states. New York Rep. Joseph Crowley says a couple with earnings of $100,000 could be 'a police officer and nurse.' 'In New York City,' he adds, 'they'd be struggling.' " Moore's inclusion of a reference to "a police officer and nurse" advances the false claim -- previously made by Newsweek and Washington Post columnist George Will, who cited a "Chicago police officer married to a Chicago public-school teacher" -- that Social Security taxes are assessed on households. In fact, Social Security payroll taxes are assessed on individual income. The false premise led Will, and Moore by implication, to claim falsely that a couple whose combined income exceeds the current cap on income on which payroll taxes are assessed would experience a payroll tax increase if the income cap is raised. As Media Matters for America has noted, they would not, if their individual income does not exceed the current cap.

As Media Matters has noted, Will, falsely claiming on ABC's This Week that Obama "wants to raise taxes on a lot of people, beginning with those earning $100,000 a year, a household," promoted the falsehood that Social Security taxes are levied on household income. Will promoted the same falsehood in a Newsweekcolumn for which the magazine subsequently issued a correction.

Additionally, Moore's assertion that Obama "has vowed ... to end the cap on Social Security taxes, which amounts to a tax hike on anyone who makes more than $100,000 in income" is false. In fact, when discussing his "plan" for Social Security in a May 18 speech, Obama asserted that "we should include what's called a 'donut hole' to make sure that this change doesn't ensnare any middle class Americans." From Obama's speech (as prepared for delivery):

Here's my plan. Right now, the Social Security payroll tax only applies to the first $102,000 a worker makes. I think the best way forward is to adjust the cap on the payroll tax so that people like me pay a little bit more and people in need are protected. That way we can extend the promise of Social Security without shifting the burden on to seniors. And we should include what's called a "donut hole" to make sure that this change doesn't ensnare any middle class Americans.

In a June 11 entry to his blog, The Page, Time magazine senior political analyst Mark Halperin highlighted as a "Wall Street Journal editorial page double whammy" Moore's column and a June 11 Wall Street Journaleditorial that made the false claim that Obama "b[ought] property at a discount" from Chicago businessman and former Obama contributor Antoin "Tony" Rezko. Halperin did not note Moore's false suggestion that Social Security taxes are levied based on household income.

From Moore's column:

In various tax proposals Mr. Obama has set the definition of rich at levels of $100,000, $200,000 and $250,000 in annual income. He has vowed, for example, to erase the Bush tax cuts not only for those who make more than $250,000, but to end the cap on Social Security taxes, which amounts to a tax hike on anyone who makes more than $100,000 in income. More recently, Austan Goolsbee, an Obama economic adviser, told me the new cap might be set at $200,000.

All of this has caused some heartburn among certain Democrats in high cost-of-living states. New York Rep. Joseph Crowley says a couple with earnings of $100,000 could be "a police officer and nurse." "In New York City," he adds, "they'd be struggling."

A similar argument came to the fore as Democrats debated the recent farm bill. Under the new law, farmers will be able to retain full subsidies even if they have incomes of $750,000. Because of various gimmicks, the USDA says that farmers could even have incomes up to $2 million and still be eligible for a farm welfare check. When it comes to farmers, Nancy Pelosi, Hillary Clinton and Barack Obama apparently believe that "soaking the rich" means soaking them with handouts.

This is not just a rhetorical exercise. It could tell us a lot about whether Democrats can come anywhere close to paying for all their spending promises and still meet their vow to balance the budget. One problem for Senator Obama and his class-warfare crowd is that repealing the Bush tax cuts for those with earnings of more than $250,000 would raise only about $40 billion a year, according to Cato Institute economist Alan Reynolds. That would leave President Obama with a $360 billion shortfall to meet his other proposals. Either those nurses and policemen are going to have to be defined as "rich" by Team Obama, or the Democrats' pledge of balancing the budget in five years is a fantasy. Add the fact that his various spending proposals will certainly prove more costly than projected. It sounds like not just the top 2% but most of the bottom 98% had better get ready for higher taxes under an Obama administration.